Financial Aid Forum: Pell Grants, Stafford Loans and Deficits

July 25, 2011

The debate over how Congress and the president can best cut the federal deficit might soon reverberate across university campuses nationwide. Federal financial aid programs including Pell Grants and Stafford loans face significant changes as a result of the belt-tightening in Washington, D.C. This week, financial aid expert Mark Kantrowitz, publisher of FinAid.org and FastWeb.com, will be on EdMedia Commons to comment on what changes in financial aid policy could mean for students.

“The proposals for further cuts to reduce the deficit are more clearly taking money away from needy students,” Kantrowitz told me last week as we discussed the budget cutting negotiations. The Pell Grant program, which faces its own specific deficit, already saw its summer grants eliminated in earlier budget compromises and could face further cuts. Kantrowitz proposes shifting funding from other federal student aid programs over to Pell Grants. “There aren’t really any simple fixes [for Pell] , other than spending money,” he says. “If one can’t allocate new money, then the best approach is to spend existing student aid funding more efficiently, by shifting it from less effective programs to the Pell Grant, which is arguably the most precisely targeted at financial need.”

Another benefit the federal government offers needy students, the subsidy for the interest on Stafford loans while students are in school, might also be on the chopping block. “Eliminating the subsidized interest for graduate and professional students is pretty much a done deal,” Kantrowitz said. “Subsidized interest for undergraduate students does not achieve any public policy goals; it does not improve access, retention or completion rates.”

What’s the most effective way the federal government can assist low-income students? How might students in your regions be affected? What financial aid questions do you have for Mark? Right here is where you get to ask them.

This post originally appeared on EWA’s now-defunct online community, EdMedia Commons. Old content from EMC will appear in the Ed Beat archives.